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Stock Broker Financial Intermediaries or Market Intermediaries role in share market
Corporate entities collaborate to ensure transactions in the market are smooth. From logging into a trading terminal to having shares credited to your DEMAT account, the collaborative effort of market intermediaries guarantees a flawless transaction.
These entities remain out of sight, yet in compliance with SEBI regulations. They ensure a streamlined experience when trading on the share market. They are called Financial Intermediaries or Market Intermediaries.
These interdependent financial intermediaries create a system in which financial markets can operate. We will now examine some of the major players in this ecosystem and their respective roles.
The Stock Broker
The stockbroker is an important figure in the financial world. They are responsible for providing advice and buying and selling stocks on behalf of their clients. They analyse investments, make financial recommendations and provide counsel to investors.
A stockbroker is a crucial financial intermediary. They are corporate entities that hold a stockbroking license granted by SEBI after thorough analysis of their credentials and due diligence. It is also imperative that they abide by all the regulations relevant to them as decreed by SEBI.
A stockbroker provides you with direct access to transact in the share markets. To initiate an investment, you must open an account with one of many registered brokers in India. Before settling on a particular broker, individuals usually apply personal preferences and compare based on popular questions like –
How simple is the platform?
How efficient is their support system?
How easily can I access reports like Profit & Loss reports, Tradebook records, and Tax P&L documents with this access?
Broker’s net worth as it should be profitable and have a positive record of profits and losses.
What are the broker’s initiatives in educating the users? Just like Stoxbox has these series of articles which provide an in-depth knowledge about investments.
Once you’ve chosen your broker and opened a trading and DEMAT account, you can begin your journey into the share market. With the account setup complete, you have multiple options for interacting with your broker.
You can contact your broker, providing your client code, to place an order for your transaction. The dealer on the other end will execute it and give confirmation of the status while you are still on the call.
Do-it-yourself or DIY is a frequently used mode of trading in the markets. Your broker provides you with a Trading Terminal to access the market. Here, after logging in, you will be able to view live prices from the market as well as place orders yourself.
Experienced users can gain access to the market through APIs. Certain brokers provide these APIs for a set price.
Brokers offer key services, such as:
Access to markets which enable us to transact.
Margins for trading. We will further delve into the topic later
Issuing contract notes for the transactions- To give you context, a contract note is a written confirmation of all transactions on an – everyday basis.
Streamline the flow of money between your trading and bank accounts.
Call and trade support, customer service for answering queries and informing about the market.
You can avail call and trade services, along with futures and options with Stoxbox.
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What is the share market? What Does It Do and How Does It Work with examples
Investing in equities is necessary to gain returns that outperform inflation. Therefore, it is important to understand the workings of the share market and all of its associated parts. Just like how we go to local stores or supermarkets to purchase our items, we can go to the share market to make investments. Transactions in stocks involve buying or selling shares. The primary goal of the share market is to enable this process by connecting buyers and sellers.
Unlike a supermarket, the share market is not a physical place; it exists in electronic form. Transactions can be made there – buying or selling stocks – and to carry out such dealings you will need to enlist the services of a registered intermediary known as a stockbroker, which we’ll look at later on.
India has two main stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Other exchanges that existed at an earlier time are no longer functional. Thus, when discussing the Indian share markets, we generally mean either NSE or BSE. Many older exchanges like Bangalore Stock Exchange (BgSE), Madras Stock Exchange (MSE), Calcutta Stock Exchange (CSE) have either merged with either BSE or NSE, or have simply closed.
Market Participants and the need to regulate them
There is a need to regulate individuals and entities who participated in the market to ensure fair and orderly functioning of financial markets. The market participant can be classified into various categories, which are as follows:
Domestic retail participants are everyday people engaging in market transactions, just like us.
People of Indian origin who are based overseas are referred to as Non-Resident Indians (NRIs) or Overseas Citizenship of India (OCI).
Domestic Institutions- These are corporate entities in India.
Domestic Asset Management Companies (AMC)- Mutual fund firms such as SBI, HDFC, Edelweiss, and ICICI Pru are all domestic Asset Management Companies.
Foreign Institutional Investors- such as asset management companies, hedge funds, and other corporate entities, are non-Indian investors.
Irrespective of who participates in the market, each person’s goal in the market is to make money through successful transactions.
Money triggers strong reactions in people like desire and fear. Thus, it’s easy to succumb to dubious methods. Unfortunately, India is no exception when it comes to such practices. As a result, the Indian share markets need someone who can set specific rules (called regulation and compliance) and make sure that these are followed by all players, thus making the trading arena equal for everyone.
Regulator
The Regulator is a government body that oversees the industry. In India it is The Securities and Exchange Board of India. This body is responsible for ensuring that all businesses comply with the laws and regulations that apply to them. The Regulator has the authority to take action against any business if they violate any of these rules, ranging from issuing warnings to enforcing fines or taking more serious courses of action.
We will understand in detail about share market regulators in the upcoming chapters.
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Loss-making Samhi Accommodations to check lukewarm checklist on bourses, insist analysts
Samhi Accommodations is susceptible to check a flat checklist on bourses on September 22, given lower retail investor hobby at some stage within the e book constructing job and unpleasant monetary performance within the old couple of years.
The grey market top price (GMP) that Samhi Accommodations commands is between 3-6 percent over the inform price of Rs 126, sellers active within the unlisted market said. This skill that merchants could per chance additionally honest mild no longer quiz a bumper beneficial properties on the first date.
“Samhi Accommodations is a loss-making hospitality firm and its monetary performance has been unpleasant for the final three years,” said Anubhuti Mishra, Fairness Learn Analyst at Swastika Investmart. “On the different hand, the firm is making development on reducing losses, and the sales more than one is 3.7 cases, which is below the commerce moderate.”
ALSO READ: Zaggle Prepaid Ocean Products and services, Samhi Accommodations to debut in T+3 timeline on September 22
The initial public offer (IPO) obtained moderately lower applications from merchants – seeing a subscription of 5.57 cases, largely thanks to licensed institutional merchants (QIB). The problem has no longer obtained ample assist from excessive web-price folks and retail merchants, who subscribed 1.22 cases and 1.11 cases, respectively.
Samhi Accommodations, a eminent branded resort ownership and asset administration platform in India, raised Rs 1,370.1 crore from the general public inform on the upper price band. It comprised a recent inform of shares price Rs 1,200 crore, and an offer-for-sale (OFS) of 1.35 crore shares price Rs 170.1 crore by three promoting shareholders.
The firm, backed by world merchants Fairness World, ACIC Mauritius and Goldman Sachs, will utilise the web contemporary inform proceeds for repaying debt price Rs 900 crore, and the comfort for usual corporate applications.
Samhi Accommodations, which acquires or builds essentially industry accommodations, owns a portfolio of 4,801 keys across 31 operating accommodations in key city consumption centres in India as of August.
Astha Jain, Senior Learn Analyst at Hem Securities, said she expects Samhi Accommodations to checklist at 3-5 percent top price to inform price. She told to e book partial earnings and retain partial half for long interval of time because the firm’s skill to plan dislocated accommodations and demonstrated monitor file to re-price resort performance thru renovation and/or rebranding is infusing optimism.
“Firm’s portfolio’s scale and diversification extra enhanced by sector tailwinds alongside with the firm’s monitor file to tackle a watch on accommodations successfully is additionally having a peep certain. Firm’s skill to assemble operating efficiencies and long-interval of time performance the utilize of analytics instruments and proper governance and seasoned administration team makes this inform a correct one,” she said.
A mountainous temporary damaging is that it has been a loss-making firm as per the financials on hand for the final three years. The web loss narrowed to Rs 338.59 crore within the yr ended March FY23, from Rs 443.25 in FY22, but earnings from operations more than doubled to Rs 738.57 crore, from Rs 322.74 crore at some stage within the identical interval.
“With the Samhi Accommodations IPO receiving a moderately subdued subscription of about 5.6x in comparison with the excessive subscription complications that hit the markets lately, we quiz a tepid checklist for the inform when it lists on the bourses,” said Anushi Vakharia, Learn Analyst, StoxBox.
“We quiz the IPO to beginning discontinuance to the issuance price of Rs. 126 per share attributable to the firm-specific traits reminiscent of loss-making place, damaging web price and elevated borrowings. This paints an overall bleak picture for the industry in comparison with its listed peers reminiscent of Chalet Accommodations and Indian Accommodations. We, therefore, dwell cautious on the inform and counsel merchants who bear obtained half to sell their shares on the gap day and rob into consideration varied avenues for funding.”
Disclaimer: The views and funding tips expressed by funding consultants on Moneycontrol.com are their have and no longer those of the net net website online or its administration. Moneycontrol.com advises users to talk to licensed consultants sooner than taking any funding choices.
Shubham Raj has six years of abilities overlaying capital markets. He essentially writes on stocks with particular focal level on F&O and PMS-AIF commerce.
See the most modern industry news, Sensex, and Nifty updates. Intention Internal most Finance insights, tax queries, and knowledgeable opinions on Moneycontrol or secure the Moneycontrol App to tackle updated!
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Disinvestment Target: Can the government break the jinx?
Started in 1981, disinvestment is a process where the government sells a part or whole of its assets or a subsidiary, such as a central or state public sector enterprise, to private entities or the public. Disinvestment can be carried out through three modes vis-a-vis minority disinvestment, majority disinvestment, and complete privatisation.
The Department of Investment and Public Asset Management (DIPAM) handles the disinvestment procedures with a primary objective to improve public finances. The disinvestment may also be done to increase private ownership and improve the management and performance of the public sector enterprise.
In the past, the government has missed targets set for prior financial years, the most recent being the Rs 1.75 lakh crore target for FY22, which was revised downwards to Rs 78,000 crore in the revised estimates. The actual proceeds for FY22 were at a meagre Rs 14,638 crore, primarily owing to the disruptions caused by the Covid-19 pandemic.
For FY23 as well, the government missed the disinvestment target. The proceeds from the disinvestment came at Rs 46,035 crore in FY23, missing the revised target of Rs 60,000 crore. The government shelved the strategic disinvestment of Bharat Petroleum Corp, which was expected to bring in Rs 50,000-60,000 crore.
Learning lessons from the past and with general elections looming around the corner, the government has set a disinvestment target at Rs 51,000 crore for FY24, lower than the previous financial year.
For FY24, the government outlined plans to sell shares in IDBI Bank, Container Corporation of India, Shipping Corporation of India, and BEML. However, we believe that strategic sales would not go through at a great speed in FY24, as this is a pre-election year where the optics of this economic reform may not be seen in a popular light. The status of the various planned disinvestments are as below:
With almost five months into this financial year and the disinvestment plan yet to see the light of day, it is looking increasingly difficult for the government to come out of its track record of repetitively missing the targets.
To get closer to the Rs 51,000 crore target, we believe that the maximum will now have to come from offer for sale (OFS) or minority stake sales.
The government has garnered close to a combined Rs 5,500 crore through OFS in Coal India and RVNL in this financial year and is contemplating close to Rs 7,000 crore through an 11.4% OFS in IRFC going ahead.
Among the other major OFS planned in FY24, the government is looking at a 5-6% stake sale in Hindustan Zinc, 20% in National Fertilizers (NFL), 10% in Rashtriya Chemicals & Fertilizers (RCF) and a stake sale in RITES.
Apart from the OFS route, the government has other options up its sleeve, which include stake sales in NMDC Steel, HLL Lifecare, Vizag Steel, and Hindustan Zinc. Moreover, the government may remotely also consider listing companies such as the Indian Renewable Energy Development Agency (IREDA), National Seeds Corporation (NSC), and WAPCOS, a PSU in engineering consultancy and construction under the Ministry of Jal Shakti.
To sum up, we believe that unless major strategic sales happen, the government will not be able to meet the target this year as well. To overcome these challenges in the long term, the government must address multiple issues that mostly derail the disinvestment plans and are mostly related to labour unions, land titles, leases, land use, and excess manpower.
Also, the government must find ways to enhance the attractiveness of public sector stocks which usually suffer from the preconceived notion of abrupt policy changes, weak operational metrics, and sub-par corporate management. In all the gloom surrounding the disinvestment targets, the fiscal deficit target of 5.9% for the current year is not likely to be exceeded as surplus funds from non-tax sources will help bridge the gap.
(The author is the Head of Research at StoxBox)
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How MentorBox helps you in your investment journey?
Guidance or hand holding is one of the most sought after factors, which one looks forward to in childhood or for making investment decisions. Investment is something, which requires proper guidance. On this front, StoxBox came out with a unique concept and training module MentorBox. This program is an ultimate destination for trading education. Their courses are designed to empower traders of all levels with the knowledge and skills necessary to excel in the financial markets.
The programs or the training modules are designed in such a way that you can learn from the very basics of investing in the share markets and slowly and gradually become an expert.
They start from the very basics like understanding basic concepts. Terminologies used like stocks, bonds, and funds. What are the differences between equities, bonds, and mutual funds/ETFs. Understand how these investments work and their potential risks and rewards. Live trading sessions with market experts will help you understand how to trade and how to buy and sell stocks.
Apart from basics they will also take you through technical analysis, which will help you in understanding the charts and help you understand at which levels one should buy and sell. This will help one to research yourself and make your own investment decisions. Not only this, MentorBox is designed in such a way that from a starter in the share market you will graduate to become an futures and options trader by opting for advanced courses.
Not to forget the experts who will take you through this journey, who bring with them more than three decades of experience in trader training programmes and creating investor awareness. These experts will introduce you to an asset class which for long have been ignored by investors, but this is the same asset class equities, which generated better returns in the long run as compared to any other asset class be it gold, real estate to name a few.
There is a proverb: don't put all your eggs in one basket. Last but not the least this program will help you to diversify your investments across different sectors, industries, to reduce risk.
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Concept of a Value Broker
When it comes to investment, we always think of safe havens like Gold, Real Estate, Insurance, Fixed Deposits to name a few. However, we forget one asset class that is investing in equities. This is because many consider investing in the share markets are riskier and chances of losing money is much higher. But, we forget one thing, which is equities in the long-term generated greater returns than any other asset classes.
Now the question comes how to invest in the share markets. Here, the role of the intermediary, which is the broker, comes into play. But, which broker to choose from? At present we have mainly three kinds of brokers, i.e., Traditional Brokers, Bank Brokers and Discount Brokers. Most importantly, all these brokers are focused more on providing transactional platforms where equity research comes as an ancillary. There is also another kind of broker who does not follow monetisation through transactions, but through creating values through insights, better technologies, better mark to market clients known as Value Broker. One of the pioneers in this concept is StoxBox.
One may ask why and how StoxBox is different? The answer is StoxBox comes in as a partner who hand holds you and helps in making investment decisions and as a result succeed in the share markets. That goes why, now let us come to the point how. The focus or the core of the business is to provide advisory and cutting-edge research through a subscription based product called ProTips, their flagship product, and not to monetise their transaction platform. At StoxBox, the transaction platform is free, which means that the research is unbiased and it is provided to help you make money. They not only help customers to understand and use research, but also provide them to use different tools in the markets like technical analysis, trading in futures, trading with option strategies through specialised courses, which is called as MentorBox.
At MentorBox, they mentor customers through theoretical courses as well as mentoring through live trading. This is an interesting concept as customers login during live markets and they get to see how experts trade during live markets using ProTips and other tools to make money and succeed in your trading and investment journey. StoxBox also mentors you on how to diversify your portfolio and how to build a portfolio and also to introduce you to intraday trading tactics. They are charging you for their advisory services and not for their platform.
Why Value Broking?
There are so many broking houses in the country as well as financial influencers where the information is free and this leads to unsolicited advice. For example, you heard or received or watched a video where it is advised to buy Adani Enterprises and you end up buying the same. However, you were not aware at which price to buy and hold for how many days or months. This is where a Value Broker comes into play. They will advise you at which point to enter and which point to exit and for how long to hold. They will also help you to control your greed factor resulting in successful risk management. StoxBox is aligning their earnings with that of the customer. As the customer will only stay and renew their subscription, only when the services are profitable. Value Brokers are a part of the value chain where the customer finds the products worthy.
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